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Despite its promises to reform public enterprises (PEs), the government once again announced that some of the closed state-owned factories would be brought into operation. The government's policies and programs for the fiscal year 2023/24 reads that Hetauda Kapada Udyog, Gorakhkali Rubber Udyog, and Butwal Dhago Udyog be reopened for operation. The government’s announcement to run these defunct companies has come at a time when it has promised reforms of PEs that are using state resources without offering any noticeable benefits for the country and the people. While the government is seeking budgetary support of $200m from the Asian Development Bank (ADB), one of the conditions put forward by the Asian lender is that Nepal needs to commit to reforming PEs. A cabinet meeting on April 18 decided to form a public enterprises recommendation committee headed by former government secretary Shankar Prasad Adhikari. “If the government insists on running the closed state-owned factories without viable plans that require no extra injection of public money, there is the question about whether donors will be happy about the government’s move,” said an expert on public enterprises who chaired a task force on reforming PEs in the past. “It is better to let these companies remain closed if they are not operated commercially and independently outside the government and politicians’ influence,” the expert said, adding that the government has been forced to inject huge amounts of its resources into badly run public enterprises. The government is currently in negotiation with the ADB to secure $200m as the government has a gap in financial resources for its failure to collect enough revenue. The government wants to get funding from multilateral donors in the form of budgetary support which the government can utilize in its prioritized sector. Donors want reforms in PEs and they have been suggesting against recklessly pouring public money into such enterprises. Among the three factories, Hetauda Kapada Udyog, a textiles manufacturer, has remained closed since 2000 after it ran under huge losses and was subsequently liquidated in 2013. It is owned by Industrial District Management Limited. The factory is spread over 8 acres and possesses machines used in making thread, dyeing, and spinning. In fact, a task force headed by Economist Pushkar Bajracharya had even suggested the government let the factory be operated by the Nepal Army to produce necessary clothing items for it. Likewise, Gorakhkali Rubber Udyog, a state-owned tire company, has remained defunct since 2012. The loss-making entity incurred a net loss of Rs 685.5m in the fiscal year 2018/19 while its cumulative losses in the fiscal year 2018/19 amounted to Rs 631.5m, according to the Annual Performance Review of the Public Enterprises 2022 published by the finance ministry. It has the outstanding dues of loans to be paid as of 2018/19 stand at Rs 1.55bn. The factory needs to manufacture radial tires as per the market demands and new plants need to be established if it is operated, according to the annual performance review report. “For this, around Rs 2bn in investment is needed,” it said. According to the report, there had been a discussion about running it by giving it on a lease. Butwal Dhago Karkhana was established in 1983 with the aim of exporting yarn and thread to the international market. The mill started production in 1991, but within a decade its situation deteriorated as the trade union and employees attached to various political parties ran it into the ground with their endless strikes and interference.

Two more commercial banks have finalized their merger. Laxmi Bank and Sunrise Bank have inked the final agreement for the merger on Monday. Both banks decided to move forward on an equal basis of a 1:1 swap ratio based on the due diligence reports. Both banks will now hold a special general meeting to endorse the merger proposal. The merged entity will be named Laxmi Sunrise Bank. Post-merger, Ajay Bikram Shah, the current CEO of Laxmi Bank will lead the merged entity. The current CEO of Sunrise Bank, Suman Sharma will exit the bank after the date of the integrated transaction is decided. It has been agreed that there will be three directors each from Laxmi Bank and Sunrise Bank on the board of the new entity. Motilal Dugar, Malchand Dugar and Bachhraj Tater will be appointed from Sunrise Bank while Raman Nepal, Swati Roongta and Manish Thapa will represent Laxmi Bank in the merged entity. Currently, the paid-up capital of Laxmi Bank is Rs 11.55bn and Sunrise Bank is Rs 10.11bn. After the merger, the paid-up capital will increase to Rs 21.65bn. Both banks had signed a merger MoU in the second week of January this year. Following this, a merger committee, comprising four members (two each from both banks) has been formed to finalize the merger. The total number of commercial banks in the country will come down to 20 from the current 21 once Laxmi and Sunrise begin their unified business. The total number of commercial banks that had reached a high of 32 in 2014. In terms of banking consolidation, the first half of FY 2022/23 was historic. The first six months of the current fiscal year saw three mergers and one acquisition in the banking sector. Kumari Bank and NCC Bank started unified business on Jan 1. The second week of January saw two mergers and one acquisition becoming successful in the Nepali banking sector; the Global IME Bank and Bank of Kathmandu merged and commenced their unified business and Prabhu Bank acquired Century Commercial Bank. Nepal Investment Bank and Mega Bank completed their merger and commenced business as Nepal Investment Mega Bank.  

The price of gold has dropped by Rs 800 per tola in the domestic market on Tuesday. According to the Federation of Nepal Gold and Silver Dealers’ Association, the yellow bullion is being traded at Rs 109, 200 per tola today. The yellow metal was traded at Rs 110, 000 per tola on Monday. Meanwhile, tejabi gold is being traded at Rs 108, 700 per tola. It was traded at Rs 109, 500. Similarly, the silver is being traded at Rs 1,365 per tola today.

At a time when Nepal’s overall exports have declined as shown by the trade data of the current fiscal year, the exports of woolen carpets and large cardamom have surged significantly. While the country's overall exports declined by 24.49 percent in the 10 months of FY 2022/23, the exports of woolen carpet and cardamom have increased by 23.21 percent and 72.46 percent, respectively. The latest foreign trade data released by the Department of Customs (DoC) on Sunday shows Nepal exported woolen carpets worth Rs 9.49bn from mid-July, 2022 to mid-May, 2023. The carpet exports during the same period of the last fiscal year stood at Rs 7.70bn. The export of cardamom has hit an all-time high with the country exporting cardamom worth 7.28bn in the review period. According to DoC statistics, the United States is the largest market for Nepali woolen carpets. Nepal exported carpets worth Rs 5.87bn to the US in the current fiscal year. Germany and the United Kingdom are the second and third largest buyers of Nepali carpets. The carpet exports to Germany and the United Kingdom stood at Rs 739.4m and Rs 630m, respectively. However, Tenzing Sherpa, President of the Nepal Carpet Producers and Exporters Association said that the export of carpets has not increased as expected. “The government data shows the rise in carpet exports. It is due to the increased demand for Nepali carpets in the world market,” said Sherpa. According to Sherpa, there is a demand for branded and quality woolen carpets, especially for celebrities and high-profile people. "If the government supports the carpet manufacturers, the export of carpets can be increased by four times," he said. Carpet manufacturers say they are able to fulfill the increased demand in the international markets but the cost of production of carpets in Nepal is high which makes it difficult for Nepali carpets to compete with products of other countries. Currently, the government has exempted tax for wool that is imported from abroad. There is no such exemption for other raw materials. Also, carpets have to be woven by hand, which requires very good skills. However, such skilled workers are insufficient in the Nepali labor market. “If the government provides us custom exemptions to all the raw materials required for producing carpets, provides skills training for workers, and supports in market promotion, export of Nepali woolen carpets in the global market would rise significantly,” said Sherpa. High growth in cardamom exports The exports of cardamom have increased by a whopping 72.46 percent in FY 2022/23. Nepal has exported cardamom worth Rs 7.28 billion in the first 10 months of the current fiscal year compared to Rs 4.22bn during the same period of the last fiscal year. Cardamom, which is especially used in the production of spices, is mainly exported to India. In the current fiscal year, cardamom worth Rs 7.26bn was exported to the southern neighbor. According to Nirmal Bhattarai, Chairman of the Large Cardamom Entrepreneurs Association of Nepal, the exports of cardamom have increased due to the surge in production in the country. Cardamom is produced especially in Nepal, India, and Bhutan. While cardamom production in India and Bhutan has decreased this year, in Nepal, its production has increased by 50 percent this year. “This has helped us to export more cardamom this year,” said Bhattarai. According to Bhattarai, the price of cardamom decreased in May and June of last year. “Traders did not sell cardamom during that time,” said Bhattarai, “The price came back to normal from the beginning of the current year, following which traders sold their stocks of cardamom.” With the decline in production in India and Bhutan, the demand for Nepali cardamom has increased, resulting in the surge of its exports from Nepal. Cardamom is cultivated on 18,000 hectares of land in Nepal. Large cardamom is cultivated predominantly in four districts of eastern Nepal—Taplejung, Panchthar, Ilam, and Sankhuwasabha.